Marketing Effectiveness The Most Pressing Problem in Business Marketing Today

Introduction Marketing effectiveness can be defined as the â€Å"quality of marketers to optimize their efforts and achieve the best short-term and long-term results†. (Buyline Research 1, pp. 5) This concept is directly related to Return on Marketing Investment (ROMI) and ROI which are often utilized in the description of the relationship between costs and the returns gained mainly in the form of profits (Buyline Research 2).Advertising We will write a custom research paper sample on Marketing Effectiveness: The Most Pressing Problem in Business Marketing Today specifically for you for only $16.05 $11/page Learn More It’s sometimes very difficult to measure the effectiveness of marketing activities either in advance or after they have been executed. The situation may be further complicated if a company uses different marketing strategies. This paper seeks to report on the difficulties that are frequently faced while measuring marketing eff ectiveness. It further describes how best the issue can be tackled by describing the strategies that can be employed to measure the effect of individual marketing activities. Difficulties in measuring marketing activities The current business environment is characterized by intense competition. Therefore firms cannot do without marketing activities such as advertising to promote their survival (King, pp. 2). Many companies usually face a dilemma in establishing whether their investment in marketing truly yields a competitive advantage for them or not. Companies can be disappointed after investing heavily in unsuccessful campaigns. However, even when good returns are realized, one should say it is not easy to determine the exact contribution of each marketing activity to that success. Research conducted indicates that most firms cannot hold their marketing departments accountable for the vast resources they use to carry out marketing activities. Few companies that have developed meas urement tools, are measuring the wrong things. The majority of them are not in a position to measure anything at all. The research indicates that about 54% of companies usually set their marketing budgets basing on historical data – clearly showing that they do not have any idea on the effectiveness (King, pp. 3). It is further noted that only about 20% of marketing executives are able to accurately estimate the impact that follows budget cuts. It’s further identified that firms that cannot accurately report on the progress of a marketing ROI usually do not have individuals that have been specifically assigned to that task (Powell 5).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Because of the difficulty that is associated with measuring the impact of advertising, existence of external impacts, and the difficulty in establishing controls; several firms cannot measu re the value of advertisement. In one particular study carried out in the year 2008, it was established that 100 biggest U.S retail banks use up to USD 2 billion on advertising annually. This implies that banks in today’s society must rely on advertisement for survival (Stern 17). Strategies for effective measurement of marketing Marketers should be in a position to collect all the data that are required to measure their marketing activities. They should be able to know the specific aspects as well as the priorities that should be measured. They should understand what should be measured in the future and most important why they are carrying out the measurements. A well planned measurement will give the firm the confidence to undertake innovations that bring a positive impact. Firms need to determine whether there are gaps in coverage, put measures in place to ensure that measurement is managed automatically rather than manually, and lastly the measurement should be integrated into the larger marketing portfolio rather be left on its own (Powell 27). Figure1: A chart showing marketing metrics continuum Identification of key performance indicators for marketing Research has revealed that marketing performance indicators usually vary depending on the specific areas of responsibility. Metrics for different areas of responsibility that are needed for effective monitoring of marketing activities include: The brand managers are required to monitor changes in statistics of aspects such as brandy equity, brand awareness, brand preference, brand image and brand loyalty (Buyline Research 12). It’s important to note that internal tools within the organization are used to collect data as an ongoing process.Advertising We will write a custom research paper sample on Marketing Effectiveness: The Most Pressing Problem in Business Marketing Today specifically for you for only $16.05 $11/page Learn More However, the best information for gauging the success of a brand is usually derived from the outside environment. Usually, the data should be collected by hand and kept in form of reports or spreadsheet. Using such data, the brand manager can monitor the increase or decrease in a product’s market performance over time. Usually, the product marketing managers often spend most of their time in the manufacturing rather than the marketing side. Research indicates there are elaborate systems that have been developed to inform the product marketing manager about the manufacturing process but very few to reveal progress on the marketing side (King, pp. 5). Similar to the brand manager, the product marketing manager is often centered on the opinions of the customer. He or she takes a kin interest in factors such as addition of new features, lowering or raising of the prices. Product managers therefore keep an eye on the brand of related evaluations (Powell 34). In most cases they take action following reports of market share, customer satisfaction, sales and price sensitivity. Public relations managers work in departments that are preoccupied with identifying how the public perceives the company, using indicators such as exposures on TV or leading newspapers (Lenskold 14). It is important to note that companies receive both positive and negative exposures and both should be used in measuring the success of the PR department. The different responsibilities carried out by the above mentioned positions are crucial in the measurement of marketing effectiveness. They are vital for the identification of the three essential things in a marketing campaign; the cost, the revenue or leads’ generates and the life time value of customers (King, pp. 4). The advertising manager is concerned with the number of viewers the company reached and how those can be increased. There are specialized software applications that allow advertisers to catalogue and track these numbers (King, pp. 6). Sales manage rs always think about the sales figures of the various commodities offered by the company. They carry out comparative studies to determine sales figures across different regions. This individuals form part of the company accounting systems, they ensure that orders are booked, invoices are sent and commissions are always paid.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Focus on performance measurement through automation It is important to note that performance measurement and marketing automation work hand in hand. For effective evaluation of marketing performance, the data capture process should be automated (Buyline Research 9). The automation should ensure that data are not only captured and organized but also measured in the most effective way. Savvy marketing automation investment decisions include greater â€Å"control of the measuring capabilities that is offered by different solutions, the capture process, the different available option and instant analysis† (King 35, pp. 3). There are several automation solutions but most are not effective as they require much more effort to access data before shaping for relevant analysis. A study has been carried out to identify the marketing performance monitoring activities that are under automated portfolios in a number of firms (Powell 9). When marketers were asked about what they desired mos t in the coverage areas, they felt underserved, and gave interesting responses. Most of them stated that better measurement capabilities would increase their loyalty by 51% with the likelihood of increasing their investment by 44% (Lenskold 12). This implies that marketers are in constant search for performance measurement solutions to determine the effectiveness of their marketing activities (Stern 24). They hope that there will be a rapid development in the automation tools which will in turn help them to foster internal and external success (Buyline Research 6). Economic Modeling Studies have established that in order to successfully measure the effectiveness of advertising and other marketing activities, it is imperative to carry out econometric analysis. This is important for establishing the impact of each element in the marketing mix, the effectiveness and ROI (King, pp. 6). Advanced data mining techniques should be employed in the determination of the strengths and weaknesse s of the marketing program implemented by a given firm (Lenskold 8). The identified challenges can be corrected by carrying out changes in the pricing, advertising and promotion. The econometric analysis examines influences from the external environment in the form of competition, changes in the market environment due to seasonality and changes of other economic conditions in order to have a better understanding of how they impact sales performance. If the results are accurately determined then planning can be carried out for future advertising, promotion, pricing, and other marketing activities to improve sales performance and distribute marketing resources for increased ROI (Stern 7). Studies have shown that econometric models provide a standard measurement technique across different portfolios of a business, marketing lines and markets; an accurate measurement of the historical performance; forecasting of the future performance and the optimization of the business operations thro ugh the media mix or channel (Buyline Research 11). Econometric modeling often requires input from a variety of key factors that include external data such as consumer data, economic performance data, competitive advertisement and internal data such as product specifications and process changes. Channel data should incorporate TV, radio, branch, magazines, point of sale and direct mail information (Buyline Research 11). Product data can include deposits, lending and other products that can be attained from the banking sector. Historical data should be collected from modeling inputs and arranged in the order of time series fashion so as to allow for adjustments to be made in the future regarding the seasonality, competitiveness, market mix, distribution changes and interaction effects (Powell 56). All the dynamics in the marketing arena are put into consideration so that a model is developed to allow pinpointing variations in any specific component. In spite of the fact that economet ric modeling provides a valuable tool for evaluating difficult actions such as spending on media, there is no single measurement method that can provide the necessary insights into marketing effectiveness across the different channels (Buyline Research 13). Therefore, it is better to combined with other control methodologies to provide an overall effective means of measuring the effectiveness of marketing activities of a given company (Buyline Research 14). Test/Control methodologies The dynamic nature of marketing activities makes it difficult for a firm to evaluate the impact of individual marketing portfolios on subsequent customer numbers. This occurs because the potential customers are informed through many different channels in the marketing arena. Due to this observation, it’s common for the effect of specific marketing activities on consumer behavior to be overstated or understated because the impact of other is not properly evaluated resulting into a biased measureme nt (Lenskold 5). Well designed experimental tests are usually multivariate which can be effectively used to measure the impact of an individual marketing activity. Matching is commonly employed in the measurement of the effectiveness of advertising. The method relies on the contrasting outcomes of participating markets with outcomes of comparable non participants (Buyline Research14). Conclusion This paper sought to report on the difficulties that are frequently faced while measuring marketing effectiveness. It further describes how best the issue can be tackled by describing the strategies that can be employed to measure the effect of individual marketing activities. Indeed, it has been established that it is very difficult to carry out an effective measurement of the impact of marketing activities. There are a lot of companies worldwide that are often misled and may not be able to know what marketing activity contributes. This paper has provided some of the most effective ways thr ough which firms can effectively measure their marketing activities. They include automation and economic modeling as well as the use of test controls. Works Cited Buyline Research. Marketing Perfomance Measurement: Target Areas Where  Marketers Want to Improve How The Measure Up. Massachusetts: Buyline Research LLC, 2008. King, William. â€Å"Measuring Marketing Effectiveness in Comparison With Sales.† 2011. Web. Lenskold, James. The Path To campaign, Customer, and Corporate profitability. New York: McGraw Hill Professional, 2003. Powell, Guy. Marketing Calculator: Measuring and Managing return on marketing  investiment. New York: John Wiley and Sons, 2008. Stern, Jim. Best Practice: Measuring Marketing Effectiveness. CA: Synergex International Corporation, 2003. This research paper on Marketing Effectiveness: The Most Pressing Problem in Business Marketing Today was written and submitted by user Mauricio U. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.